Written by

Detroit Free Press Staff Writer

Wayne County Executive Robert Ficano’s former chief of staff is in line for a $96,000 annual pension — which will pay out an estimated $4 million if he lives to 82 — despite only working for the county for 8½years.

Matthew Schenk, 41, now works for the Detroit Water and Sewerage Department, where he was hired at $194,000 a year as chief operating officer. He’s applied for a county pension that he could begin collecting later this month, about the time he turns 42.

Critics say such lucrative taxpayer-guaranteed pensions are bankrupting local governments. Wayne County’s pension plan has only 50% of the money it expects will be needed to pay benefits over the next 30 years.

“This is the legacy cost that is going to kill Wayne County,” said Brendan Dunleavy, a former auditor general of the county who now works as a financial planner. “The idea is to lower your personnel costs, but now you’ve got more costs in the pension system spread over fewer and fewer active employees.”

County Commission Chairman Gary Woronchak, D-Dearborn, said he doesn’t blame Schenk for taking advantage of the offer — but he blames those who made it possible.

“Is there a way to defend it? Hell no,” Woronchak said. “Taxpayers should be sick to their stomach that this sort of thing goes on when the county is on the brink of financial disaster.”

Ficano’s spokeswoman June West said the county is saving money by trimming managers.

“The county has reduced the number of appointees by over 30%, and many of those were through the use of early retirement incentives,” West said. “The retirement incentives minimized the number of layoffs.”

Schenk’s pension was made possible by a controversial early retirement incentive Ficano offered to numerous appointees in January 2011. The deal allowed retirees to buy up to four years of service credits at discounted rates and waived the traditional 55-year-old age requirement, which opened the retirement window to younger people like Schenk.

Schenk, a lawyer, noted he had to pay to access the benefit. He estimates he will have to put in $440,000 to buy the necessary service credits to qualify, meaning about one-third of the benefit will come from Schenk’s money. Some could come from his 401(k)-style retirement plan — which includes a 5-1 match provided by the county.

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“It is a better deal than having the defined contribution,” Schenk said Wednesday. “But it is complex.”

The incentive was unusual because it allowed people to buy into a traditional defined-benefit pension plan, which is guaranteed by taxpayers. Most large employers, including other local governments, have been moving toward 401(k)-style defined contribution plans, which eliminate future liabilities.

“The opening of these plans in the last half-dozen years is going to get a lot of the blame for the excess strain it’s causing on the pension system,” Woronchak said.

Woronchak noted many county commissioners, including him, took advantage of the plan. Woronchak expects to receive a pension worth $30,000 to $40,000 annually if he works until a traditional retirement age.

Schenk, who left the county last year, also is entitled to lifetime medical coverage, though he doesn’t use that benefit because he receives coverage from the the Water Department.

He was an at-will employee for the county and could have been let go for any reason, as several appointees were in January 2012.

One of those terminated at that time, James Wallace, has sued. He argues he was let go for refusing to do political work on county time, but the county denies pressuring him to do political work and said he was eliminated as part of budget cutting.

Pension costs have been a rising issue among many local municipalities, with higher costs draining money away from current services. Detroit’s retiree costs are one of the main factors prompting the appointment of an emergency manager.

Dunleavy said any investor would pay $440,000 to receive a lifetime annual benefit of $96,000.

“The payback period is less than five years,” Dunleavy said. “If I had that investment, I’d have people line up out the door.”

The Free Press reported last year that Schenk, who served on the county’s pension board when the offer was made, was one of several Ficano insiders best positioned to maximize the benefit. He also is eligible to purchase credit for previous years that he worked for the City of Detroit to get to the 20 years of service to qualify for the pension.

Schenk said he initially planned to defer collection the pension but applied after receiving a letter from the retirement system telling him he must apply now or lose the option. Retirement system deputy director Gerard Grysko confirmed the system sent the letter to Schenk, but wouldn’t elaborate.

Schenk, Turkia Awada Mullin and Azzam Elder were three top aides to Ficano, and all had an additional retirement perks added to their equation. Ficano’s offer included severance payments equal to two weeks of pay for each year of service. Under the deal he offered Schenk, Mullin and Elder, they could count that money toward their final average compensation, which forms the basis for the pension calculation.

Schenk said Wednesday that he passed on that portion of the offer.

“I didn’t take a severance when I left, and I called the pension board to make sure that was not included in my calculation,” Schenk said.